Can You Get a School Loan if You File Chapter 13 Bankruptcy?

You may be able to get a school loan if you have filed Chapter 13 bankruptcy, but you'll likely be limited to federal student loans, rather than loans from private lenders.

It is important to remember that federal student loans are based on a person's financial needs, not their credit worthiness. As a result, getting a school loan after filing Chapter 13 bankruptcy is a real possibility.

Getting a School Loan After Filing Chapter 13 Bankruptcy

After a Chapter 13 filing, many people use their new-found financial freedom to get more education. School, though, can cost a great deal of money, and many people finance their degrees with student loans.

After a Chapter 13 bankruptcy, you may be able to get a student loan. Here are some things to remember:

Federal loans made to students. A bankruptcy will probably not affect a person’s ability to get federal loans given directly to students. Such loans may include Perkins loans, Stafford loans, and other federal grants.

Private student loans. Contrary to the federal government, private lenders are more concerned with a student’s credit score. Since bankruptcy may affect a person’s credit, it may be harder to obtain a private student loan immediately after Chapter 13 bankruptcy.

On the other hand, if you have not yet discharged your Chapter 13 bankruptcy, you should always check with your trustee or attorney before taking out a loan during bankruptcy.

Discharging Student Loans in Bankruptcy

Some students may also wonder whether they will be able to discharge student loans when they file bankruptcy. Unfortunately, most people are unable to eliminate student loans in bankruptcy.

However, an exception applies if an individual can prove “undue hardship,” which requires showing all three of the following conditions:

The filer cannot maintain a reasonable standard of living if forced to repay a student loan.

This financial condition is likely to last for a long time.

The filer has made a good faith effort to repay the loans.

So, discharging student loans is very difficult, but obtaining new student loans if you previously filed Chapter 13 bankruptcy may be possible.